2. Winston Churchill
“In time of
war, when
truth is so
precious, it
must be
attended by a
bodyguard of
3. Nigeria
About 170 Million People
Largest Population of Black
People
159 out of 178 in Human
Development Index
70.2 % live under a dollar a day
8.2 % of the World’s Poor People
143rd Out of 183 Countries in
Corruption
80% of Oil Revenues benefit only
1% of Population (World Bank)
4. Oil
Discovered in 1956
95% of Export
11th Largest Nation in
Proven Oil Reserves
14th Largest Nation in
Oil Production at 2.2
Million Barrels per day
Mainstay of Economy
$1.6 Trillion Revenue
Since Discovery (BBC)
Four Refineries
Source of “Resource
Curse”
5. Refinery Capacity
First Refinery: 1965 (Port Harcourt 1)
Second Refinery: 1978 (Warri)
Third Refinery: 1980 (Kaduna)
Fourth Refinery: 1989 (Port Harcourt 2)
Combined Refinery Capacity : 455,000 BPD
Capacity Utilisation: Less than 30%
Estimated Domestic Demand: 550 BPD or 30
Million Liters
A barrel = 159 Litres
South Africa: 7 Refineries and Egypt: 9 Refineries
6. Why Import ?
Lack of Refining
Capacity
Huge Domestic Demand
Lack of Alternative
Energy
Lack of Alternative
Transportation
Why not Barter ?
Corruption and Greed
7. What is Subsidy?
Government absolves
part of the real cost of
refined petroleum
products and passes
the rest to the
Consumer
Government regulates
prices of the products
through the Petroleum
Products Pricing
Regulatory Agency.
8. How It works ?
• Application
Stage 2 • Reconciliation
• PPPRA • Importation • Settlement
Verification • Verification
• Documentation • Documentation
• Distribution
Stage 1 Stage 3
9. Why Subsidise ?
Fluctuations in Crude Oil
Prices
Economic Growth and
Competitiveness
Product and Export
Promotion
Purchasing Power
Availability of Products
Strategic Importance
10. Growth of Subsidy
Pre-democracy Era Barter
(Limited Subsidy)
Democratic Era (Open)
Growing Population
Increased Dependence on
Petrol
Increased Power of
Petroleum Marketers
Increased Neglect of
Infrastructure
Unsustainable
11. Behind The Subsidy….Sanusi
“You establish an LC for importing 20,000MT of PMS and the
PPPRA says this is at a landed cost of N145 for example per
litre. So u know that for every litre in that vessel you will get at
least N85 as subsidy. Now you have a number of
"possiblities":
1. You can off load 5,000 MT and bribe customs and other
officials to sign papers confirming u offloaded 20k MT. Then
do the same across the chain with a paper trail showing you
delivered 20k MT to a tank farm, and maybe even that u
transported it to Maiduguri entitling you to a share of the price
equalization fund. Maybe for N20-N30 per liter you bribe all
those who sign the papers. The 15k MT you take to Benin or
Ghana or Cameroun and sell at market price thus making an
additional "profit" of N55/ltr on 15,000MT!
12. Behind The Subsidy
“You can just forge documents and have them
stamped without bringing in anything and collect the
subsidy-PPPRA pays based on DOCUMENTS.
You can bring in the fuel, load on tankers, sell some at
N65N some at 80 some at 100 some across the land
borders.
You can do all this and no one can catch it or prove it
because somebody was paid to sign off on docs. And
with a high enough margin there is too much
temptation to be resisted and firepower for bribing
officials. ”
13. Behind The Subsidy
When I spoke to the house of reps I told them why I was
suspecting fraud. It starts from PPPRA "allocations" based on
"capacity". You will find a company like Mobil with
capacity for say 60,000 MT and a relatively unknown
name with a capacity of say 90k MT. Red alert number 1.
Although PPPRA is supposed to give license only to
marketers with a national distribution network you see names
of companies where you have never seen a filling station in
their name.
I was a chief risk officer in UBA and in FBN for many
years approving loans so I know the name of every big
player in every industry that nigerian banks lend to as
these are among the biggest banks in the country. I see
names on the list I don't recognise either from portfolios.
I looked at or industry studies over the years. Red alert
number 2.
14. Behind The Subsidy
I studied the papers presented to PPPRA in a
short period in 2010 (I won't tell you how I got
them!). And I was surprised that on some days
over 10 vessels are said to have discharged
cargo in lagos on the same day-clearly the
same officers stamping and "verifying" that the
vessels were SEEN. Is it really realistic that
on the same day 13-15 vessels can
discharge in Lagos?
Red alert number 3. “
15. Big Scam
False Banking
Transactions
Huge Debts
Zero Monitoring
Connivance and
Complicity
Huge Personal Wealth
Political Complicity
Interconnectedness
Lack of Transparency
16. Current Reality
“The debt crises currently suffered by
developed economies is indication that
governments have a responsibility to the
people to manage revenues and
expenditures wisely. With the subsidy on
fuel projected to reach 118% of the
Federal Government Capital Expenditures
and 4.1% of the country's entire
GDP, maintaining the fuel subsidy would
not be a wise decision.”
Ngozi Okonjo Iweala
17. In English….. WE ARE
BROKE!
We are a borrower nation!
Even our creditors have their own problems
We have been borrowing to subsidise
petroleum products
We have borrowed to pay minimum wage
We have borrowed to pay political office
holders
We cannot continue because or bankruptcy
beckons.
18. Why We Are Broke…
The Senate President: N88.3 Million per
Month
Deputy Senate President : N50 Million per
Month
Senator: N14 Million per Month
72 Ministers
20 Special Advisers
N5 Trillion Internal Debt
N30 Billion External Debt
*** US President : 60 Million Naira Per Annum
19. Conclusion
“It is an Oily
Affair, We have
to Tread Softly”
